Ex parte Stamey

• Decision Date: 30 June 2000
• Citation: 776 So.2d 85
• Parties: Ex parte Gary STAMEY and Deborah Stamey. (In re Bernard H. Eichold II, in his capacity as Health Officer of Mobile County, Alabama v. Jackie Easter et al.)
• Court: Alabama Supreme Court

776 So.2d 85

Ex parte Gary STAMEY and Deborah Stamey.

(In re Bernard H. Eichold II, in his capacity as Health Officer of Mobile County, Alabama v. Jackie Easter et al.)

1981629.

Supreme Court of Alabama.

June 30, 2000.

Richard L. Thiry and Russel A. McGill of Thiry & Caddell, Mobile, for petitioners.

Barre C. Dumas of Dumas & McPhail, L.L.C., Mobile, for Green Tree Financial Corp.

Cecily Kaffer Rothrock and Michael A. Youngpeter of Rothrock, Hannan & Youngpeter, Mobile, for Hallmont Homes, Inc., Jarod Hall, and Gaylon Hall.

HOUSTON, Justice.¹

Gary Stamey and Deborah Stamey, third-party plaintiffs in an action currently pending in the Mobile Circuit Court, petition for a writ of mandamus directing the trial court to vacate its order compelling arbitration of the Stameys' claims against Green Tree Financial Corporation, Hallmont Homes, Inc., and Hallmont employees Jarod Hall and Gaylon Hall. We deny the writ.

In December 1996, the Stameys contracted with Hallmont Homes, Inc., which is operated by Jarod Hall and Gaylon Hall, to purchase land and a mobile home. The contract also included assurances that Hallmont would prepare a foundation for the mobile home and would install a septic system and a light pole. The Stameys claim that the septic system and the light pole were never installed. The Stameys had borrowed money from Green Tree to pay for these purchases and installations. Included in the financing agreement between Green Tree and the Stameys was this arbitration provision:

"ARBITRATION: ALL DISPUTES, CLAIMS OR CONTROVERSIES ARISING FROM OR RELATING TO THIS CONTRACT OR THE PARTIES THERETO SHALL BE RESOLVED BY BINDING ARBITRATION BY ONE ARBITRATOR SELECTED BY YOU WITH MY CONSENT. THIS AGREEMENT IS MADE PURSUANT TO A TRANSACTION IN INTERSTATE COMMERCE AND SHALL BE GOVERNED BY THE FEDERAL ARBITRATION ACT AT 9 U.S.C. SECTION 1. JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THE PARTIES AGREE AND UNDERSTAND THAT THEY CHOOSE ARBITRATION INSTEAD OF LITIGATION TO RESOLVE DISPUTES. THE PARTIES UNDERSTAND THAT THEY HAVE A RIGHT OR OPPORTUNITY TO LITIGATE DISPUTES IN COURT, BUT THAT THEY PREFER TO RESOLVE THEIR DISPUTES THROUGH ARBITRATION, EXCEPT AS PROVIDED HEREIN. THE PARTIES VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHT THEY HAVE TO A JURY TRIAL, EITHER PURSUANT TO ARBITRATION UNDER THIS CLAUSE OR PURSUANT TO A COURT ACTION BY YOU (AS PROVIDED HEREIN). THE PARTIES AGREE AND UNDERSTAND THAT ALL DISPUTES ARISING UNDER CASE LAW, STATUTORY LAW AND ALL OTHER LAWS INCLUDING, BUT NOT LIMITED TO, ALL CONTRACT, TORT AND PROPERTY DISPUTES WILL BE SUBJECT TO BINDING ARBITRATION IN ACCORD WITH THIS CONTRACT. THE PARTIES AGREE THAT THE ARBITRATOR SHALL HAVE ALL POWERS PROVIDED BY LAW, THE CONTRACT AND THE AGREEMENT OF THE PARTIES. THESE POWERS SHALL INCLUDE ALL LEGAL AND EQUITABLE REMEDIES INCLUDING BUT NOT LIMITED TO, MONEY DAMAGES, DECLAMATORY RELIEF AND INTUITIVE RELIEF. NOTWITHSTANDING ANYTHING HEREUNTO [sic] THE CONTRARY, YOU RETAIN AN OPTION TO USE JUDICIAL (FILING A LAWSUIT) OR NONJUDICIAL RELIEF TO ENFORCE A SECURITY AGREEMENT RELATING TO THE MANUFACTURED

HOME SECURED IN A TRANSACTION UNDERLYING THIS ARBITRATION AGREEMENT, TO ENFORCE THE MONETARY OBLIGATION SECURED BY THE MANUFACTURED HOME OR TO FORECLOSE ON THE MANUFACTURED HOME. THE INSTITUTION AND MAINTENANCE OF A LAWSUIT TO FORECLOSE UPON ANY COLLATERAL, TO OBTAIN A MONETARY JUDGMENT OR ENFORCE THE SECURITY AGREEMENT SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY TO COMPEL ARBITRATION REGARDING ANY OTHER DISPUTE OR REMEDY SUBJECT TO ARBITRATION IN THIS CONTRACT, INCLUDING THE FILING OF A COUNTERCLAIM IN A SUIT BROUGHT BY YOU PURSUANT TO THIS PROVISION."

Dr. Bernard Eichold II, in his capacity as health officer of Mobile County, sued for injunctive relief against the Stameys, alleging that their property was in violation of state health laws—specifically, his complaint alleged a violation concerning the septic system on the Stameys' property. The Stameys filed an answer, along with a third-party complaint against Hallmont and Jarod Hall and Gaylon Hall (hereinafter all collectively referred to as "Hallmont"), and Green Tree, alleging conversion, fraud, and breach of contract. The Stameys contend that Hallmont and/or Green Tree caused the problem with the septic system for which the Stameys were sued. Hallmont and Green Tree both moved the trial court to compel arbitration of the claims asserted against them. Hallmont was not a signatory to the arbitration agreement. The trial court granted the motions to compel.

This Court has held that when the issue raised in a petition for the writ of mandamus is the correctness of a ruling on the question of arbitrability, that ruling is reviewed de novo. Ex parte Roberson, 749 So.2d 441, 446 (Ala.1999).

It is undisputed that the Stameys voluntarily and knowingly entered into the arbitration agreement with Green Tree. We have reviewed the Stameys' arguments concerning the arbitration provision as they relate to their claims against Green Tree, and we find them to be without merit. See Northcom, Ltd. v. James, 694 So.2d 1329 (Ala.1997), and Ex parte Isbell, 708 So.2d 571 (Ala.1997). Green Tree presented the trial court evidence showing that the transaction on which the Stameys' claims are based involved interstate commerce. Exhibits to the Stameys' petition show that the Green Tree office the Stameys dealt with is located in Pensacola, Florida, and the Stameys acknowledged in the security agreement they signed that the contract involves a transaction in interstate commerce. Therefore, the trial court properly granted Green Tree's motion to compel arbitration.

While the Stameys' contract with Green Tree contains an arbitration agreement, neither the sale contract between the Stameys and Hallmont nor any other document to which Hallmont was a signatory contained an arbitration agreement. Hallmont's motion to compel arbitration was based on the arbitration provision in the contract between Green Tree and the Stameys.

Normally, in order to have a valid arbitration provision, there must be an agreement to arbitrate, and if no agreement exists, then a party cannot be forced to submit a dispute to arbitration. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). The question whether one has assented to an arbitration provision is governed by ordinary principles of a state's common law and statutory law governing the formation of contracts. See Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). Assent to arbitrate is usually to be manifested through a party's signature on the contract containing the arbitration provision. However, both Federal courts and Alabama courts have enforced exceptions to this rule, so as to allow a nonsignatory, and even one who is not a party, as to a particular contract, to enforce an arbitration provision within that same contract. Two such exceptions apply to the present case. The first is an exception under a theory of equitable estoppel for claims that are so "intimately founded in and intertwined with" the claims made against a party that is a signatory to the contract. See Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir. 1993) (quoting McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir.1984)); see also Ex parte Napier, 723 So.2d 49 (Ala.1998); Ex parte Gates, 675 So.2d 371 (Ala.1996). The second exception arises from a third-party-beneficiary theory that affords the third party all the rights and benefits, as well as the burdens, of that contract, including those associated with arbitration. See Ex parte Dyess, 709 So.2d 447 (Ala.1997); Ex parte Warren, 718 So.2d 45 (Ala.1998); Georgia Power Co. v. Partin, 727 So.2d 2 (Ala.1998); Infiniti of Mobile, Inc. v. Office, 727 So.2d 42 (Ala.1999); Colonial Sales-Lease-Rental, Inc. v. Target Auction & Land Co., 735 So.2d 1161 (Ala. 1999); see also McPheeters v. McGinn, Smith & Co., 953 F.2d 771 (2d Cir.1992); O'Connor v. R.F. Lafferty & Co., 965 F.2d 893 (10th Cir.1992); In re Prudential Ins. Co. of America Sales Practice Litigation All Agent Actions, 133 F.3d 225 (3d Cir. 1998); MS Dealer Service Corp. v. Franklin, 177 F.3d 942 (11th Cir.1999).

I. Equitable-Estoppel Exception

In order for a party to be equitably estopped from asserting that an arbitration agreement cannot be enforced by a nonparty, the arbitration provision itself must indicate that the party resisting arbitration has assented to the submission of claims against nonparties—claims that would otherwise fall within the scope of the arbitration provision—to arbitration. See Ex parte Napier, 723 So.2d at 53. All that is required is (1) that the scope of the arbitration agreement signed by the party resisting arbitration be broad enough to encompass those claims made by that party against nonsignatories, or that those claims be "intimately founded in and intertwined with" the claims made by the party resisting arbitration against an entity that is a party to the contract, and (2) that the description of the parties subject to the arbitration agreement not be so restrictive as to preclude arbitration by the party seeking it. See Id. In other words, the language of the arbitration agreement must be so broad that the nonparty could assert that in reliance on that language he believed he had the right to have the claims against him submitted to arbitration, and, therefore, that he saw no need to enter into a second arbitration agreement.

Hallmont argued to the trial court that the arbitration agreement included in the Green Tree contract is broad enough to include the Stameys' claims against Hallmont. To determine whether Hallmont can enforce the arbitration agreement under this exception, we must look to the language of the arbitration agreement...